Before understanding which provides the better solution, they need to understand the two systems key differences between Hosted VoIP and On-site IP PBX. The following paragraphs will help you clarify your options so you can make an informed decision.
Option 1: Hosted VoIP
Businesses who select Hosted VoIP essentially invite an outside company to run their entire phone operation. The company will then only use a special software (and occasionally hardware for particular providers) for operating and updating their system.
On top of the setup costs, companies then need IP phone sets. These set can purchased outright or pleased depending on your preference. The service Provider of Hosted VoIP runs all other soft-and hardware externally.
Finally, the external provider looks after every aspect of call management.
Option 2: On-site Voice over IP (VoIP) PBX
The key difference between On-site VoIP and Hosted VoIP is that with On-site VoIP the business accommodates all hardware and software on their own premises. This means your organization would be required to purchase, administer and support all software and hardware, including all required updates.
What do these differences mean?
Most of the functionalities offered by a Hosted VoIP system are also provided by a IP PBX system. Both solutions can provide features such as:
- Virtual receptionist (IVR),
- Unlimited extensions
- Free calls between extensions,
- Conference calls
- Calling groups.
There are some special features provided only by Hosted VoIP such as:
- Emailed voice messages by email
- Follow me.
The critical difference between the Hosted VoIP and On-site IP PBX is the startup and ongoing costs, as well as flexibility, business continuity and ease of maintenance.
With a Hosted VoIP solution, there is very little to invest except for the initial start-up costs and the IP phones. Any other costs for this solution are also easily managed. Since a contracted company manages your telephone system externally, there will be no unforeseen additional maintenance costs. And of course you won’t require your own trained IT staff to administer this system.
Additional fees can occur though if you require additional services, or when you add new users. You may not need to change the phone system immediately though. Not all VoIP providers have the skills to customize the system to match your needs and requirements exactly. Sometimes, features are developed but not immediately offered to clients. And finally, if your hosted provider goes out of business, the continuity of your phone system maybe at serious risk.
Another critical element of Hosted VoIP is bandwidth. When you use Hosted VoIP you will need more bandwidth due to the internal bandwidth (extension to extension) requirements – this may potentially be another contender for extra spending.
Some VoIP experts calculate that high-quality Hosted VoIP demands G.711 with 90 to 100K in bandwidth per conversation. However, some service providers may be able to reduce this down to 40k and under.
On-site IP PBX requires a business to invest in all set-up costs, including IP phones, a server to host the system, and bridging cards to connect any existing phones to the PBX environment. This investment can often be significant and exceed hundreds of thousands of Thai Baht. You will also need on-premise and trained IT staff to install and administer the system.
The advantage of an On-site PBX system is its high flexibility and potential for customization. The addition and changing of extensions and system users can be carried out quickly and easily. Adding users and changing numbers is done quickly and efficiently, and there’s no need to involve an external service provider at extra expense.
One drawback to consider: if you company moves location, all hardware must obviously be moved as well. With Hosted VoIP, you would simply unplug your phones and plug them into the LAN again at the new premises.
One also needs to take system life expectancy into account; this can be done by the time it takes your business to depreciate the initial investment and comparing the years of the Hosted VoIP with the On-site IP PBX solution. Hosted VoIP usually looks favorable for some time, but after a few years IP PBX will be the less costly solution.
A table comparison of both types of VoIP
Choosing which solution is best for you
Solutions managed by outside providers are usually the preferred choice for small and medium size enterprises without the cash for purchasing and setting up the required hard and software but who still need want to take advantage of the features, cost-effectiveness and other benefits of VoIP. The also appreciate the value of enjoying a state-of-the-art phone system without having to look after its maintenance and upgrades themselves.
It is the large enterprises who have the investments funds, the longer planning horizons and an already existing infrastructure and support system, who decide for an On-site IP PBX system. These organizations usually already have skilled IT staff or won’t find it difficult to hire additional people. The exception to this rule is large enterprises that are spread over many locations and offices. In such a case a hosted solution can become much more feasible and cost-effective.
There are always trade-offs
All technology decisions involve tradeoffs. Softcontrol advises that businesses in need of a VoIP system look at all the pros and cons and apply them to their own unique situation. To help make the right decision, you can also request a Hosted VoIP demonstration by a knowledgeable provider such as Softcontrol.